Retaining the Best
Executive Summary
Indian IT sector is the fastest growing employment sector these
days. Bringing in the best to the
economy and also increasing the value of human potential, hitherto unheard of
in the context of Indian Economy.
Intelligence, Knowledge and Technical Know- How is valued across the
globe. Opportunities have increased and
employees job-hopping have become a common phenomenon and major threat to the
employers at all levels. Here in this paper,
the major issues relating to employee retention and highlighted the ways in
which managers can make a difference…
Retention matters because high turnover creates high replacement
costs, and is clearly associated with low levels of customer satisfaction,
loyalty and lost revenues. It is
particularly challenging today due to a number of factors including aging work
force, growing imbalance in the supply and demand of qualitative
personnel. In addition, today’s, workers
have different expectation about work-life balance. People stay with employers when they see the
Organization as a source of pride and affiliation, good supervisors, fair
compensation and work is meaningful.
People seek greener pastures, when leadership changes, conflicts arise
with immediate supervisors or close friends leave, and responsibilities change
in ways that they do not favor.
Managing for Retention is dealt in detail to curtail this growing menace
to the organizations both potentially in terms of technical skills and right
attitude skills.
Retaining
the Best
Hiring and Retention are the two sides of the same
coin. They complement each other and if
both are done well they produce what every company desperately needs: first- class human assets. Hiring success by getting the talented, hard
working people brings in not just a considerable advantage over the competitors
would create another challenge: Keeping
those star employees on board. After
all, if your human assets are measurably superior, other companies would notice
and lure them away with higher pay, more authority and more appealing work
situations- perhaps the same inducements
you used to recruit them. We need to
analyze within the organization on the defensive, employment practices,
benefits and compensation schemes to determine if they are unconsciously
undermining bonds of loyalty between the company and the great people who are
hired.
Retention is the challenge
faced by many of the world’s most admired companies. “War for Talent” became the scenario of many
employment categories – particularly the high skilled areas such as IT, Software
development, electrical engineering, accounting and finance- demand outstripped
supply, touching off what has become talent warfare.
Lack of human talent is a serious concern on future growth and there
is a need to pull all the stops in order to retain the most valuable
employees. Few world renowned
techniques those succeeded are Work-Life balance programs, casual dress regimens,
and on-site child care, sports tables proliferated, and increased
responsibilities with required authority.
Though on and off
recessions hit the high tech sector, and
ripple the economy, followed by unemployment, this phenomenon do not exist
long. Recessions don’t last forever,
and most people recognize that the war of talent would heat up again once the
economy got back on track. In some
sectors of the economy, the war never really subsided. Surveys conducted over a period of time
reveal that employees often get motivated by various factors that contribute to
higher level of job hopping
Retention Matters
Retention is the converse of turnover – turnover being
the sum of voluntary and involuntary separations between an employee and his or
her company. Industry-wide and company-
specific measures that track turnovers rates reveal that most companies
surveyed had turnover rates in the 15 to 50 percent range, though a sizeable minority
enjoyed single digit turnover.
Retention isn’t
simply a “feel good” issue. The
retention of good employees matters for three important bottom-line reasons
1.
The growing importance of intellectual
capital
2.
A casual link between employee
tenure and customer satisfaction
3.
The high cost of employee
turnover
The Importance of Intellectual Capital
In the current
“Knowledge Era” intellectual capital is what defines a company’s competitive
edge. Intellectual capital is the unique
knowledge and skills that a company’s work force possess. Today’s successful businesses win with
innovative new ideas and top-notch products and services – all of which
originate in the knowledge and skills of employees.
People who possess the intellectual capital includes
·
Computer Programmers
·
Network and Software Engineers
·
Technical Designers and
Solution Architects
·
Direct Marketing Analysts
·
Mid Level Managers- (they know
whom to contact to get things done)
·
Top Level Executives – (they
have business savvy and industry knowledge)
·
Strategic planning and business
development professional ( they know how to do competitive and other forms of
analysis)
·
Human Resource professionals (
Recruiting, employment law, compensation and other critical employee relation
issues)
·
In-house legal counsel ( they
understand intellectual property, securities, and other areas of business law)
Whenever employees leave, the company loses their
hard-won knowledge and often expensively acquired skills. The loss is compounded when the employees go
to the competitor. The time and money
invested in training and on job skills is shared by the competitor at no cost.
Customer Satisfaction
The most important factors in business survival and
growth are the customer satisfaction.
This is vital factor that forces retention to be a critical aspect. Employees who are satisfied with their work
and their company are most likes to create satisfied customers. This is not just intuitively obvious but
Research also supports this correlation.
Research findings stated that:
·
Negative employee attitudes and
behaviors adversely affected the satisfaction of the customers
·
High employee turnover reduced
customer satisfaction and revenues.
·
The extent to which the
employees understood their jobs and company’s strategic objectives had a direct
bearing on their attitudes and behaviors
Developing positive employees’ attitudes, job tenure and the
financial performance develops the links between customer satisfaction and
financial revenue growth. When employees
feel an attachment to the firm, they are most likely to share their positive
images and feeling about the firm with the customers. When the customer is exposed to favorable
testimonials, they respond more firmly to the companies.
The Cost of Turnover
The high price of turnover is the third major reason that retention
matters. Employee turnover involves
three types of cost, each of which saps bottom-line results:
1.
Direct expenses including the
out-of pockets cost of recruiting, interviewing, and training replacements.
2.
Indirect costs, such as the
effect on workload, morale and customer satisfaction.
3.
Employee categories such as information technology, software
programming, and management consulting and public auditing routinely experience
turnover rates of 20 to 25 percent.
Considering the salary levels in these fields, those rates must result
in a painful financial burden for the affected company.
Why Retention is so challenging?
The challenge of retaining good employees is complicated by a number
of factors:
·
Demographic conditions
·
Cultural expectations
·
Upheavals in the world of work
Demographics
Demographic changes have made retention especially more challenging:
1.
The workforce overall is
maturing. The average age of employees
is 35.
2.
Economic growth is outpacing
the growth of the workforce. The
3.
The supply of highly skilled
technicians and professionals is being overwhelmed by demand – particularly in
IT related fields.
The ramifications of these trends are clear: a pronounced shortage
of skilled workers- and escalating competition among companies to recruit and
retain those that are available.
Cultural Expectations
People’s expectations about work also strongly influence retention
patterns. Gone are the days when
employees spend their entire lifetime working for one firm, except in the
government services and factories it has become a rare phenomenon. Employees, their colleagues, and companies
consider one another almost as family and give each other the same dedication,
commitment and support that one would give family members. In contrast, the current culture emphasize on
fast moving, and continual change- including rapid job-hopping in search of the
best possible combination of work, compensation and future opportunities. Thus, the company’s retention goals might be
more or less challenging, depending on the cultural factors that shape its
region’s or industry’s employment trends.
Upheavals in the world of work
Changing economic and cultural circumstances can produce
dramatic upheavals in the work world.
§ A trend towards free agency
§ The dissolving employer/ employee contracts
§ An intensifying need for technical skills
§ A growth in internet recruiting
§ Demands for greater work-life balance
When you put these trends together, it’s clear that
companies can no longer expect employees to join them early in life and stay
indefinitely. Instead, firms must
actively and creatively encourage good people to stay- especially in high-tech
markets.
The Special Challenge of a diverse work force
Retention is especially challenging when the work force is highly
diverse. From age and gender, to part
time, full time, ethnicity, race, sex, physician ability – companies are both
benefiting from and struggling with the differences among employees. “One-Size-Fits-All’’ strategies for keeping
good people simply don’t work any longer.
Companies can best improve their retention rates by crafting creative,
specialized strategies for each major segment of the work force.
The contingent work force
Members of the Contingent
Work Force- part timers, contractors, and temporary employees – offers some
important advantages, as well as difficult challenges for Managers and HR
departments.
Primary advantages include
§ Flexibility
§ Affordability
Challenges include
§ High Turnover
§ A lower degree of loyalty to the firm and its products
§ A growing demand for the same benefits that regular employees
receive such as satisfying work and career – development support
Young Workers
Younger workers – primarily those in their twenties – bring energy –
freshness, and state of the art technical knowledge into the firm’s work
force. These workers pose some difficulties:
The following four strategies can help:
Female Employees
Many corporate women are discourages by the “glass ceiling” that
blocks their advancement. Others want or
need more flexibility than their employers can provide. Still others – like their male counterparts –
have developed Business concepts that they would pursue as individuals than as
employees of some faceless corporation.
The resulting “brain drain” carried a heavy price.
The four strategies that can help:
Identify
the upper management positions occupied by the women and those who are in
pipeline. Talking to these women is find
out what’s important to them and then finds ways to meet their needs.
Take
a hard look at the corporate environment.
Barriers to female success can be subtle- but very real. Identify high-potential women and given them
equal access to career enhancing opportunities:
line positions, skill-building opportunities, special project
assignments, committee leadership and appointment to high visibility teams.
Supervisors
should be made responsible for meeting the company’s gender equity goals. Assign an ombudsman to handle any bias
incidents
Specifically,
numerous female entrepreneurs offer more flexibility, understanding and an open
management style- all of which can give their corporation a vital competitive
edge.
There are many ways to address the gender concerns in
the workplace. No matter how you choose
to do so, communication, creativity and a proactive approach will help
Race, Ethnicity, Sexual Orientation and Other
Differences:
Human beings have a long history of treating one another unfairly
because of differences- whether the difference is race, ethnicity, sexual
orientation, physical ability or another characteristic. Many people have suffered discrimination in
the workplace – sometime covert, sometimes open- if they didn’t fit in with
what others thought of as the “mainstream” culture. This kind of unfair treatment carries a high
price of businesses.
Companies
can’t afford to neglect the talent found among people who are “different”. “Every talented employee counts and finding
ways to keep them simply makes good business sense.
Why People Stay
People stay with a company for many different reasons, including job
security, a work culture that recognizes the importance of work life balance,
recognition for a job well done, flexible hours, or a sense of belonging. However, in cultures in which it’s assumed
that people may freely change jobs, the major motivations for staying are:
Pride in the Organization:
People want to work for well-managed companies headed by skilled,
resourceful leaders who have clear vision of the firm’s future, and who can
devise powerful strategies for success, and who can motivate others to realize
that vision.
A Respected Supervisor:
Even more important is the employee supervisor relationship. People are more likely to stay if they have a
supervisor whom they respect and who is supportive of them.
Fair Compensation:
People also want to work for companies that offer fair
compensation. This includes not only
competitive wages and benefits but also intangible compensation in the form of
opportunities to learn, grow and achieve.
Affiliation:
The chance to work with respected and compatible colleagues is
another element that many people consider essential.
Meaningful Work:
Finally, people want to work for companies that let them do the
kinds of work that appeal to their deepest interest. Satisfying and stimulating work makes all of
us more productive.
As said, it is that if companies want to be more successful at
attracting and retaining talent, they should evaluate and strengthen their
value propositions to employees:
“To create a compelling employee value proposition, a company must
provide the core elements that managers look for- exciting work, a great
company, attractive compensation, and opportunities to develop. A few more perks, casual dress code, or more
generous health plans won’t make the difference between a weak EVP and a strong
one. If you want to substantially
strengthen your company’s EVP, be prepared to change things as fundamental as
the business strategy, the organization structure, the culture and even the caliber
of the leaders”.
Why People Leave
People also leave organizations for many different reasons, but
primarily because one or more of the above conditions was either absent at the
beginning or has since been eliminated.
For example:
The company’s leadership shifts:
Either the quality of the top management’s decisions declines or new
leaders – whom employees don’t yet trust or feel comfortable with – take the
helm.
Conflict with immediate supervisors:
People may also leave when their relationship with their bosses
becomes stressful or problematic and they don’t see any other options in their
company.
Close Friends leave:
One or more colleagues whom an employee particularly likes and
respects leave the firm, thus taking away an affiliation that is very
meaningful to that employee.
An unfavorable change of responsibilities:
A person’s job responsibilities change so that the work no longer
appeals to his or her deepest interests or provides meaning or stimulation.
Perhaps the number
one point to keep in mind when thinking about why people leave is this: People most often leave for the wrong
reasons. That is, they leave without
really understanding why they are unhappy or what opportunities to improve
things may exist within the company.
Thus they jump from company to company, making the same mistake each
time.
Managing for Retention
There are few ways by which managers can keep as many good employees
as possible. Below given is the list of
few ways that will cover most of the bases.
1. Get people off to a good start:
Getting people off to a good start begins
with hiring people who are suited to their jobs and making sure that they
understand what they are getting into. A
good start also begins with a new employee orientation that makes them feel
welcomed and part of the group
2. Create a great environment
– with bosses whom people respect: Managers often assume that company policies and corporate culture
determine the working environment. They
do, to an extent. But policies can be
circumvented. In any case, the atmosphere in a department or unit is more
important to individual employees than the culture of the corporation as a
whole. Bad bosses are not conductive to
a great environment. If the managers are
repellent, count on every employee with marketable skills to leave. In the end, its better to replace bad
managers and supervisors than to replace an endless stream of employees.
3. Share Information: Freely dispensing with information – about the
business, financial performance, about strategies and plans- tells employees
that you trust them, that they are important partners, and that you respect
their ability to understand and contribute to the business as a whole
4. Give people as much
autonomy as they can handle: Many people enjoy working with a minimum of supervisors. So give people as long a leash as they can
handle. Doing so will make them happy
and make your job as manager easier.
5. Challenge people to
stretch: Most
people – particularly the ones you want most to retain- enjoy a challenge and
the feeling that you’ve entrusted tem with bigger responsibilities than they
had a right to expect. So put the
people you want more to retain into jobs that will make them stretch- and give
them the support they need to succeed.
6. Be Flexible: Flexible work arrangements are highly successful in retaining
employees. Virtual teams, flexible work
plans and telecommuting are effective in boosting retention. Managers can allow on-the-spot flexibility,
letting employees rearrange work to care for children, keep doctor’s
appointment. Today employees value that
kind of flexibility highly.
7. Design jobs to encourage retention: Nothing is more
soul deadening for an intelligent contributor than a job that is too
repetitive, too isolated, insufficiently challenging, or downright
unpleasant. So if you are unacceptable
high turnover is a critical job category, take a good look at what you’re asking
people in that job to do everyday. Steps
can be taken to cure the turnover problem through job redesign: adding variety
to a repetitive job, engaging isolated employees in occasional team projects,
upping the challenge and so forth.
8. Identify Potential
defectors early: Great work environments and great jobs are a matter of opinion; what
challenges one person may terrify another.
You won’t know how well you are doing on either score unless you ask.
While you are at it, get feedback on your performance as a
manager. Arrow Electronics uses a
“360-degree feedback” system, monitored by a CEO to determine whether its
managers are actually providing the feedback and coaching that they should.
9. Be a retention-oriented
manager: Never
forget that part of your responsibility as a manager is to assure proper
staffing in your unit. Retaining good
and excellent performers is part that job.
So it is important to check on the ways of managing people and
scheduling the work flow.
Bibliography /References:
Economic Times Reviews.
